Question
Stuart Manufacturing Corporation was started with the issuance of common stock for $50,000. It purchased $7,700 of raw materials and worked on three job orders
Stuart Manufacturing Corporation was started with the issuance of common stock for $50,000. It purchased $7,700 of raw materials and worked on three job orders during Year 1 for which data follow. (Assume that all transactions are for cash unless otherwise indicated.)
Direct Raw Materials Used | Direct Labor | |
---|---|---|
Job 1 | $ 1,500 | $ 2,200 |
Job 2 | 2,300 | 3,900 |
Job 3 | 2,800 | 1,900 |
Total | $ 6,600 | $ 8,000 |
Factory overhead is applied using a predetermined overhead rate of $0.70 per direct labor dollar. Jobs 2 and 3 were completed during the period and Job 3 was sold for $9,630 cash. Stuart paid $700 for selling and administrative expenses. Actual factory overhead was $5,900.
Required
a. Record the preceding events in a horizontal statements model. The first event for Year 1 has been recorded as an example.
c. Record the closing entry for over- or underapplied manufacturing overhead in the horizontal statements model, assuming that the amount is insignificant.
d-1. Prepare a schedule of cost of goods manufactured and sold for Year 1.
d-2. Prepare an income statement for Year 1.
d-3. Prepare a balance sheet for Year 1.
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